IR35 has changed the way that businesses hire contract workers resulting in widespread confusion for many business leaders and the teams tasked with hiring temp professionals. However, it doesn’t have to be that way and hiring teams can still move forward with contract workers and stay compliant. It just requires a little know-how and forward planning. Here, we reveal everything there is to know.
What HR teams need to know about hiring contract workers
IR35 is a specific legislation that covers the way a business can engage with a contractor workforce. It aims to combat avoid tax avoidance and protect worker’s rights by ensuring that only legitimate contractors operate via their own limited company (PSC). Medium to large-sized businesses looking to benefit from contract workers, must now adhere to IR35 legislation in order to stay compliant which means there are a few additional responsibilities when it comes to hiring contract workers.
To get it right and stay compliant, HR teams must be up to date with the latest legislation to prevent the business from breaching any IR35 rules. Put simply, IR35 means that the responsibility has now shifted and HR teams in charge of engaging contract workers must now guarantee that all appropriate taxes and worker rights are adhered to. For this reason, it’s crucially important that HR professionals are trained up and given the resources they need to be able to confidently approach IR35 and contract hires.
Another route to consider when hiring contract workers is to use a reputable and professional compliant umbrella company. Under this approach, the umbrella company would take care of all administration and legislative responsibilities, allowing the business to benefit from contract workers, and stay compliant, and the HR department to focus on other business-critical tasks.
Why HR teams should invest in umbrella company solutions
When HR departments are responsible for hiring contract workers, it brings with it a whole host of responsibilities which cannot only be tricky to understand but changing legislation makes it hard to keep up with. That’s where an umbrella company comes in as they act as the intermediary between contract workers and the business and mean HR teams have one less thing to worry about.
Once a HR professional has identified the right contract worker, they inform the umbrella company who sets out the contract and workers’ rights. The business will pay the umbrella company and the umbrella company pays the contract worker.
Compliance isn’t the only benefit of using an umbrella company. It removes the need for timely administration work from HR teams and streamlines business operations. An umbrella company doesn’t just ensure the contract worker is paid but also ensures contracts are signed, tax is paid, and that rights are observed. All of this frees up internal HR departments to work on other projects while allowing the business to take advantage of contract workers.
How to stay compliant in your hiring process
HR teams will still be responsible for advertising specific roles and finding the right contract worker. For this reason, HR professionals still have a responsibility to remain compliant and fair throughout the hiring process and beyond. This includes providing clear briefs with realistic deadlines and expectations, providing prompt payment, showing appreciation for a contract worker’s work, offering competitive offers and compensations, and always ensuring professional and polite interactions.
The truth is, IR35 has turned contract hiring on its head and affected several businesses and industries. While the legislation has brought with it a number of changes and challenges, businesses can still benefit from contract workers though and HR teams can remain compliant. It just takes the right support, knowledge and processes and using an umbrella company is an effective way to overcome these obstacles.
Kris Simpson, Country Manager UK at Cool Company, the fastest-growing umbrella company
working to simplify and streamline administration for recruitment agencies and contractors. Providing
freedom for contractors without the bureaucracy. While allowing businesses to benefit from access to
niche talent without the need to take on new hires, or handle the admin associated with contract
recruitment.
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